Sunday, April 8, 2012

On Personal Stops

Happy Easter Sunday! Been a little while since I have posted, hope I can remember how. Full day out in the yard yesterday and another gym marathon this morning. Weekend flies by very fast.

Market Notes and Observations
Last week during the correction I sold out of all longs on Wednesday. I had been much better on the gain side on all positions (even MBFI) but perhaps I hung around a little too long as the correction kept growing. My basic trading plan was for no real large correction before SPX 1440 or so and so I gave things more room that normal in case that happened. As such, a correction is in progress and here are the tallies:
BANR - +6%
CTXS - +3%
WLK - +3%
MBFI - -4%
WRI - +2%
Overall I always get worried when anything largely anticipated or expected happens. While pullbacks of 3-5% are "normal" during runs higher, I think the character of rallies since 2010 are a bit different.

As the run up since December went further and faster than many had thought, I do not think I can dismiss the possibility that a pullback becomes something more dangerous here. Monday morning is still far away (market time wise) so I am in wait and see mode. I think earnings will be the final arbiter of how the market will handle this pullback and things get going this week. Keep a particular eye on the retail sector. I have a concern that retail stock action may be pricing in more of a hope spending will continue higher than an actual reflection of that spending by the market. I could be wrong, but I will be giving weight to earnings and forecasts in that group more than usual.

On Personal Stops
Back on March 8th I discussed the reasons why I was pulling back from blogging as much (Reduction Sauce). I have been thinking about this more as of late and especially after reading something that made me want to redouble my efforts of finding a better time balance and taking care of myself better.

In his book "Backstage Wall Street" Joshua Brown (The Reformed Broker) tells about a very personal moment in the chapter "Breakaway". I am including it here (with permission) as I think in a book that was informative and important throughout, this section was the most honest, revealing, scary, and moving part of the entire work:

"I know what I need to do. I'm leaving. I've spent 10 years doing this sh*t. I can't do it anymore. I can't even think about doing it anymore. It's all bad".

I wrote Josh and told him that this segment of the book was very important. It's most important to make a change BEFORE your spirit gets broken. It takes courage and self belief of magnitude to set a personal stop like this.

We all understand how stops and exits protect capital and manage risk. Most know how to set them and most stick to them without fail. But what about personal stops? What about points and actions you know you want or need to change? Are you setting those stops? Are you protecting the things important to you? Consider this list I have been working on for myself, do any apply to you and at what point would you want to do something about them?
-How may times has your doctor said to change something. How many more times will they have to ask?
-Finding a new job that utilizes your full ability and gives a chance for growth
-Time and differing paths slowly causing a drift away from interaction with longtime friends
-Wife, husband, child, dog, or cat pulling away from you because you are "too busy" all the time
-You have a favorite activity, but you don't do that very much anymore
It is your own list that will be important for you.

Find out for yourself what you want to change. Set your personal stop. Then channel your inner Gandalf and hold the line. "You shall not pass!":

Watchtower, you know we had a whole week of about 80 degree weather but now its been two weeks of cold mornings so I am still waiting to go. Check out this new Berkley Nanofil line looks pretty good: http://www.berkley-fishing.com/line/nanoFil